Q: I am looking to expand my employment service into other
cities in the United States. What method is better, franchising or
satellite offices?

Bill Poindexter
Career Services Inc.
Via e-mail

A: The answer depends on two things: what kind of
business you have and what kind of business you want to have. The
kind of business you have now determines whether your agency can be
franchised. The kind of business you want to have decides whether
franchising is the best way to build it.

Let's start with what you want. If you plan to rapidly
expand your concept nationwide, franchising is probably the best
choice, says Robert Barbato, associate dean of the College of
Business at the Rochester Institute of Technology in Rochester, New
York.

Because franchisees--rather than the franchisor--provide the
capital for expansion, a business can grow much farther and faster
than if it were funded by, for instance, bank loans or internally
generated funds. "You could probably sell a few hundred
franchises in several years, but you probably couldn't open a
few hundred company-owned offices that fast," says
Barbato.

If, on the other hand, you plan to add only a handful of offices
in a few new markets, company-owned satellites are probably a
better choice. The heavy legal and regulatory costs involved in
creating a franchise make it impractical for limited expansions,
Barbato says.

Also, seriously ask yourself whether you want to become a
franchisor, which is very different from being in the employment
services business. Are you prepared to handle the more extensive
staffing demands necessary to support an entire franchise system?
And what about the competition? In an industry with many large,
well-established franchises, are you prepared to be the new kid on
the block?

Even your management style will likely need to be revised.
"A person good at selling employment services may not be good
at selling franchises," says Barbato. "For one thing,
it's a different customer you're going to be selling to
now."

Indeed, franchisees can be difficult as well as different. A
renegade franchisee could seriously harm a business's image in
the marketplace. Yet the franchisor may have granted a 10-year
license and have few options to stop the franchisee's
activities.

A company-owned office, on the other hand, is run by a manager
who is hired by--and can be fired by--you. However, what a
company-owned office gains in control, it may lose in terms of the
extra dedication a franchisee is likely to show as compared to a
hired gun.

Even if you think franchising is for you, that doesn't mean
your business is franchisable, says Geoffrey Stebbins, president of
World Franchise Consultants in Southfield, Michigan. No matter how
successful your employment service is, it won't work as a
franchise unless it appears to be a good business opportunity.

"People get too caught up in the actual product," says
Stebbins. "We're not talking about selling employment
services. We're talking about `Does the employment service
appeal to people as a business opportunity?' "

What makes an appealing business opportunity? The franchise
should be based on a concept with pizzazz, says Stebbins, such as a
new kind of fast food or a patented technology for repairing
automobile finishes. And, he adds, it must produce a superior
product or service.

A good franchise concept also must be thoroughly systemized and
its operations documented so it can be copied by others. It must be
something that can be run in a noncentralized way. Finally, it must
produce enough profit to absorb franchising fees and yield adequate
return for the franchisees' investment.

Does all that describe you and your business? The fact is, few
businesses are likely candidates for franchising. Regardless, there
are thousands of franchises out there. Ask yourself what it is that
makes you different. If your business passes these tests, go for
it. Nothing succeeds quite like a successful franchise.

Q: I'm suffering a cash flow squeeze. How can I
increase the amount of cash I have on hand?

Name withheld
Via e-mail

A: When someone squeezes you, squeeze someone else.
Go over your accounts receivable to locate overdue payments, then
try to collect them, says Ron Torrence, a McLean, Virginia,
business consultant and author of Ten Keys to Sales and
Financial Success for Small Business (Ten Keys).

Determine if your biggest customers are paid up, he suggests.
Accelerating the payment of one large invoice can make all the
difference. Torrence recalls one client who needed $100,000 in 90
days to avoid bankruptcy. Going over his accounts receivable
revealed several clients who were overdue by a total of $140,000.
"He got on the phone and, within 60 days, had collected
$125,000 and was able to meet his needs out of his own
resources," says Torrence.

Don't forget to squeeze your own business. Look for
slow-moving or dead inventory, and try to turn it into quick cash.
You may be able to ease your payables pressure by returning stale
inventory to suppliers for full or partial credit. Put what's
left on sale. "You can even sell [merchandise] at cost or less
than cost to convert dead inventory into cash," Torrence
says.

Once you get the emergency under control, take steps to avoid a
repeat, adds Charles Matthews, director of the Small Business
Institute at the University of Cincinnati. Create a cash flow
budget that shows where your cash will come from and where it will
go for the next month. Extend that to three months and then a year
to prepare for long-term surprises, advises Matthews. Anticipate
future problems and find a way to eliminate them.

You may be able to improve cash flow by changing your billing
procedure, suggests Matthews. For instance, start faxing invoices
instead of mailing them. Accept credit cards instead of billing
customers for transactions. This way, you may collect the cash when
or before you ship the goods.

Make sure you don't spend cash inappropriately. For
instance, Torrence says many companies immediately pay for fixed
assets, equipment and other large purchases when they should borrow
to conserve cash. "Always finance long-term fixed assets with
long-term financing," he says.

If you can't figure out where all your money's going,
Torrence suggests looking for evidence of internal theft.
"Look to internal controls to make sure the bookkeeper
isn't embezzling or the goods aren't going out the back of
the warehouse," he says. "It does happen."

Managing cash through internal controls, appropriate financing,
careful inventory management and effective collection is especially
important for fast-growing companies, Torrence says. Growing
companies consume more and more cash as accounts receivables and
inventory grow. That's one reason so many companies grow fast
for a while, then burn out. So, says Torrence, "make sure you
have a plan before you hit the growth ramp."

Mark Henricks is an Austin, Texas, writer specializing in
business topics.